Federalism, Free Markets and the Liberty To Let One's Mind Wander.
I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives
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"Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Thursday, August 05, 2010

This is the biggest batch of nonsense that I have ever heard. The maniacs running Washington and running the nation into the ground are contemplating knocking US$800 billion off of the balances of homeowners whose home prices have fallen below the loan balance. This desperate attempt, if it does happen, will hopefully be the final nail in the coffin of government intervention as this will be the end of the government's ability to stimulate the economy,

However, this wrongheaded approach to government intervention in markets is just transferring money to stupid people and those dopes that purchased houses at the top of the market. It will be paid for by those who did not purchase homes or those that rent. It will b e paid for by our children an grandchildren who will be forced to mop up our socialist mess.

There really is not reason what-so-ever to stay in the US and giving up citizenship for those that are capable of doing so should be deeply considered. The nation will be in a economic freefall within the next 5 years if this kin of nonsense continues.

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The lead article in Tuesday’s Wall Street Journal put in perspective as follows: “The issue: Whether to use cash the Fed receives when its mortgage-bond holdings mature to buy new mortgage of Treasury Bonds, instead of allowing its portfolio to shrink gradually.”

Now let me see if I get this right. The Federal Reserve Board controls the printing of money and the amount of money in circulation in the USA. They are the government’s bank, where the government deposits the people’s money (tax monies). And that bank, privately owned but rapidly becoming the fourth arm of the government itself, is purchasing more and more of the government’s (really, the people’s) debt as a result of its government’s excessive spending. In other words, the government is going into this massive debt to its own bank. The question I would like to ask is this: if government treasuries (debt) are so much in demand right now, why does the Federal Reserve Board even have this kind of discussion? Isn’t it like pushing the accelerator to the floor? At night? And losing sight of where you are going?

“The central bank’s $2.3 trillion (that’s with T, not a B) portfolio has nearly tripled in size since 2007,” according to the same article. And the Fed is discussing increasing it even more now, rather than allowing this grossly overextended portfolio to contract? Something’s wrong. As we look at the recent market activity of U.S. Treasury Bonds and Ten-Year Notes, we observe they are starting their most ambitious run upwards since the all-time highs recorded in December 2008, when the Panic was in full force. That was a bubble, created by fear. This is starting to look like another bubble created by fear. It’s on the way to becoming a double bubble and if it continues, it means “double bubble trouble.” Treasuries don’t become bubbles unless there are troubles. It may be time for the Fed to get its foot off the accelerator as the lights are going out, and start to think about taking less risk. Yes, I know the argument that this is how the Fed is keeping us from falling into another recession by purchasing mortgages and Treasuries to keep rates low. But why is the government allowing its bank to buy so much of its debt? Who is in control here? Those who control the debt. And who is losing control by these decisions?